Banks will face new curbs on home repossessions to prevent families from being evicted when they fall into financial difficulties, the Chief Secretary to the Treasury has promised.

The pledge was made by Yvette Cooper in an interview with The Observer as the government braces itself this week for official confirmation that Britain is entering recession for the first time since the early Nineties.

Rising unemployment is expected to trigger a wave of mortgage defaults as people who lose their jobs find themselves unable to keep up payments on their homes. Repossessions have already increased to 19,000 in the first half of this year - a 40 per cent increase on the previous six months. Experts believe the figure will climb to 26,000 in the second half of 2008. The total number of people suffering negative equity is expected to rise to around two million as house prices plunge.

Ministers believe that after pumping billions of pounds of public money into rescuing banks, taxpayers will expect greater leniency from their lenders when they struggle to meet mortgage payments. 'We need a more responsible approach to repossessions,' Cooper said in the interview. 'What we are looking at is something looking much more widely at all of the banks, because I think repossession needs to be lot rarer. We need to do everything that we can to keep people in their own homes.'

However, with figures this week expected to show Britain's economy shrinking over the last quarter - the first of what is widely expected to be the two quarters of negative growth required to confirm a recession - Cooper warned that the government could not stop the economic tide.

'It's clearly going to be tougher times ahead. I don't think any government can prevent economic slowdown, faced with the kind of global problems that we have had,' she said. 'What we can do is step in and, by dealing with the problems in the banking system, prevent the worst of the credit squeeze hitting people.'

Her words reflect a battle that is developing between Labour and the Tories over how to tackle problems in the real economy that are now squeezing ordinary Britons.

There were signs last night that Labour, more than the Tories, is benefiting from the crisis: a survey published today for the political website Politicshome.com shows the Prime Minister's popularity ratings bouncing back to the levels he last enjoyed in April, before the summer's leadership doubts. And a separate ComRes survey for today's Independent on Sunday shows the Conservative lead has been cut to just nine points - the smallest gap between the parties since last March.

Seeking to stop Brown's 'bounce', Tory leader David Cameron has called today for new measures to keep people in jobs, including a VAT holiday for small businesses, which would enable them to defer paying tax bills for up to six months, and putting pressure on councils to pay what they owe to small businesses faster.

Writing in The Observer, Cameron adds: 'We intervened to prevent the beating heart of our economy - the financial system - from collapsing. We've got to do the same for its lifeblood. Small and medium-sized businesses employ over 13 million people and turn over £1,440bn a year.' The Tories will unveil further measures on jobs and homes, amid fears their consensus agreement with Labour over the banking crisis has left them sidelined.

But as President George Bush confirmed last night he would convene a summit of world leaders to address the economic crisis, following lobbying from EU leaders, Chancellor Alistair Darling sought to reinforce the message that Labour would help hard-working families through the looming recession.

He told the Sunday Telegraph: 'You will see us switching our spending priorities to areas which make a difference.' Areas that could benefit include housing, energy and small businesses. Capital projects, including two new aircraft carriers, as well as London's £16bn Crossrail transport project, would go ahead.

The spotlight will fall on homeowners this week with the publication of a report commissioned by housing ministers on private renting. Academic Julie Rugg's study is expected to highlight concerns over the buy-to-let bubble, and show how landlords of multiple properties are now falling behind on payments, potentially impacting tenants, forcing them to move.